For the first time in years, Americans saw our political system work the way it is supposed to: Both parties rediscovered the art of compromise.
The $400 billion budget deal Congress approved in the early morning Friday, just as the government was about to endure its second shutdown in three weeks, sets a spending framework for two years.
Highlights include $80 billion a year in increased military spending, $65 billion a year more for domestic programs, and $89 billion in relief for parts of the nation battered by hurricanes, wildfires and flooding last year. A detailed spending bill is expected next month.
The key to success for both Republican and Democratic leaders was a newfound willingness to embrace the most moderate voices in the other party over the most extreme elements in their own camps. The result was a budget deal that provides needed stability, along with some spending that is crucial, and some that is wasteful. The Democrats and the GOP disagree about which spending is which. The victory lay in their ability to work past that disagreement.
At this juncture, the nation simply cannot move forward without this type of political compromise. However, this deal’s lifting of broad spending caps adopted during showdowns between Democratic President Barack Obama and the GOP-controlled Congress, on top of the enormous tax cuts recently enacted, is a financial compromise the nation won’t be able to afford to keep making.
For moderate Republicans, the increased commitment to military spending was an absolute must. Democrats supported sending $6 billion to the states to fight the opioid addiction epidemic. They reinstated $7 billion for community health centers and funded a health care insurance program for needy children for 10 years. The deal also prevents some funding cuts to Medicare providers, and closed the Medicare prescription- drug doughnut hole a year earlier. There is $4 billion for veterans hospitals and clinics.
And it infuriates the more radical elements in both parties.
On the Democratic side, House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer were pilloried by those furious at both the increased military spending and the fact that the bargain does not help the Dreamers brought to the United States illegally as children. A permanent path to citizenship for Dreamers, or at the least a restoration of the Obama-era Deferred Action for Childhood Arrivals program that guaranteed they would not be deported, has been a key demand of some Democrats who are willing to shut down the government over the issue. Schumer and Pelosi calculated that while voters broadly support Dreamers, they don’t think it’s worth shutting down the government over DACA. And if the issue isn’t resolved swiftly, it gives the Democrats a good issue to run on this fall.
On the Republican side, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell were pilloried by small-government absolutists furious that all the increased spending will be tacked on to the nation’s debt. Other Republicans would be fine with borrowing for the military spending, yet don’t want to borrow more for social programs. But McConnell and Ryan were finally able to outmaneuver the small wing of their party that held it hostage. They calculated that the party would be best served by showing it can run the government and increase its commitment to the military.
The trick now is for the leaders of both parties to find a path forward together that isn’t entirely greased with pork, because in the long run, the nation can’t afford such fiscal irresponsibility, and the economy won’t tolerate it, as the financial markets seemed to show last week.
The tax cut passed late last year is projected to add at least $1 trillion to the nation’s debt in the next 10 years. This budget will add at least $400 billion in debt in the next two. Projections say the government will have to borrow more than $1 trillion to cover expenses this year, by far the most since 2012. That’s an extraordinary figure at a time when the economy is growing steadily.
Both the spending increases and the tax cut, beyond being unaffordable, will stimulate some increased economic activity. But few economists would advise purposely adding accelerant to the economic fire when unemployment is at 4 percent and an expansion has continued for nine straight years.
The losses in the stock market are largely a reaction to the specter of higher interest rates and inflation that could come if the economy heats too quickly, and to the burden of debt so much spending will create. Neither an overheating economy nor more debt make sense, and neither is desirable.
Drowning out extremists at both ends of the spectrum was a start. Now moderates from both parties must embrace the much harder work of acting together to govern responsibly.